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I've been trying to "incentivise" my children to keep their rooms tidy. By which I mean nagging and general coercion. It isn't working. If the household finances were up to it, I'd consider a monetary bribe.

That's what an economist would do. Economists love incentives, and it's largely because of them that we have to put up with ugly verbs like "incentivise".

According to the authors of the best-selling (2005) book Freakonomics, Steven D. Levitt, an economist at the University of Chicago, and Stephen J. Dubner, there is no human problem that can't be solved by an appropriately targeted incentive.

"The typical economist believes the world has not yet invented a problem that he cannot fix if given a free hand to design the proper incentive scheme. His solution may not always be pretty - it may involve coercion or exorbitant penalties or the violation of civil liberties - but the original problem, rest assured, will be fixed."

Whether it's paying obese people to lose weight, sick people to take their meds, or drug-addicted women to undergo sterilisation (yes, it happens), all are amenable, it seems, to monetary inducements.

We can even "incentivise" our way to educational achievement. As the Harvard professor Michael Sandel points out in his book, What Money Can't Buy: The Moral Limits of Markets, "The idea that cash incentives can cure what ails our schools looms large in the movement for educational reform."

In the US, some school districts have tried to raise achievement by aiming cash incentives at children, with mixed results. In New York City, for example, paying kids for good test scores did nothing to improve their academic performance. But in Washington, cash rewards for attendance, good behaviour and turning in homework helped some students (Hispanics, boys and students with behaviour problems) achieve higher reading scores.

In another incentive programme, students (and teachers) were offered cash payments of $100 to $500 for exam success in advanced courses. The aim was to improve university readiness among low-income and minority students.

The results have been positive but, as Sandel observes, the programmes that succeeded offered more than cash; "they transformed the culture of the schools and the attitudes of students toward academic achievement". In other words, the money was a nice extra (it had "an expressive effect", making academic achievement "cool") but success had less to do with bribery than with the special training for teachers, twice-weekly tutoring sessions after school, and the 18 hours of Saturday classes that went with it.

Economists are right when they say that people respond to incentives, and teachers are no different, but the responses aren't always the ones we'd want. In the US, the No Child Left Behind law, with its emphasis on maths and reading scores, led to a narrowing of the curriculum, teaching to the test, legal "gaming" of the system, and blatant cheating by some schools.

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In a recent forum on the Freakonomics website, education experts were asked, "Why don't incentives appear to be working in cases of teacher merit pay?"

Supporters maintained that merit pay just needed to be tweaked. But education academic Richard Rothstein argued that incentive systems have a corrupting influence, and many "have actually harmed the institutions they were designed to improve".

"When health care systems (such as Medicare) attempted to reward cardiac surgeons, or their hospitals or practice groups for survival rates of their patients, medical professionals responded by declining to operate on the sickest patients. When the Department of Labour attempted to reward local agencies for placing the unemployed in jobs, the agencies increased placement rates by getting more workers into easily found short-term poorly paid jobs, and fewer into harder-to-find but more skilled long-term jobs."

A 2010 study which looked at the impact of performance-related pay in Portugal's public schools in the three years after it was introduced found "that the increased focus on individual teacher performance caused a sizeable relative decline in student achievement, as measured by national exams". The study also found evidence of grade inflation, "disruption of teacher co-operation ... and increased administrative workloads, both resulting in job dissatisfaction".

Of the six best-performing nations in the OECD, New Zealand teachers were the lowest paid.

A 10 per cent increase in teachers' pay, they said, "would give rise to a 5 to 10 per cent increase in pupil performance".

They speculated that higher teachers' pay would attract more able graduates to the profession, make entry into the profession more competitive, and improve teachers' standing. Might we have more success if we "incentivised" less, and focused more on supporting a well-paid and respected teaching workforce?